On September 2, 2014, the Ninth Circuit, in the case of Coons and Novack v. Jacob L. Lew, et. al., rejected a constitutional appeal by an uninsured plaintiff and Arizona physician challenging two critical pieces of the Affordable Care Act: (1) the Independent Payment Advisory Board (IPAB), which monitors Medicare spending (referred to by its critics as “death panels”); and (2) the individual mandate, which imposes a tax penalty for certain individuals that do not obtain mandated health coverage.
On the IPAB, Dr. Novack, an Arizona physician, challenged the establishment of the IPAB on the ground that it violated Article I’s non-delegation principle. The Ninth Circuit rejected this claim on ripeness grounds, without addressing the merits of Dr. Novack’s argument. Dr. Novack had claimed that his challenge was ripe because, as an orthopedic surgeon who received 12.5% of his patient care payments from Medicare, he could reasonably anticipate suffering financial harm from IPAB’s actions in the future. The Ninth Circuit found this claim of future financial harm to be “highly speculative” and “certainly not impending” because the IPAB is prohibited from recommending reduction in payment to providers until January, 1, 2019. The Court directed the District Court to dismiss Dr. Novack’s claims related to IPAB for lack of jurisdiction.
On the individual mandate, the Ninth Circuit rejected three challenges by Plaintiff Coons, an uninsured Arizonan. First, Mr. Coons claimed that the individual mandate infringed on his substantive due process right to medical autonomy by “forcing him to apply limited financial resources to obtaining a health care plan he does not desire or forcing him to save his income and pay a penalty,” and by forcing him to create relationships with non-physician intermediaries. Following the Sixth Circuit, the Ninth Circuit rejected these arguments because the individual mandate “implicates Plaintiff’s economic interests only – a substantive due process right abandoned long ago by the Supreme Court.” Mr. Coons “remain[ed] free to obtain medical insurance of his own choosing – or to obtain no insurance, but at a financial cost – and to use or not use any such insurance in selecting future doctor-patient relationships.”
Second, Mr. Coons claimed that the individual mandate violated his fundamental privacy right in non-disclosure of personal medical information. The Ninth Circuit rejected this challenge as unripe, because Mr. Coons had not yet applied for medical insurance, and hence no third party had yet requested that he disclose his medical information. His claimed intrusion was therefore “speculative” and “prudentially unripe.”
Third, Mr. Coons claimed that the Arizona Health Care Freedom Act enabled him to evade the individual mandate. The Arizona Health Care Freedom Act, which was adopted by Arizona voters in 2010, states that no rule or law could “compel, directly or indirectly, any person, employer, or health care provider to participate in any health care system.” The Ninth Circuit rejected Mr. Coons’ argument, holding that the federal Affordable Care Act preempted the Arizona law because the Arizona law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”
This holding constitutes a significant victory for the Obama Administration affirming the constitutionality of the Affordable Care Act. That said, the rejection of plaintiffs’ arguments on IPAB and non-disclosure of personal medical information on jurisdictional, not merits, grounds suggests that these may be areas for potential future litigation.